WSJ: Westinghouse Electric in Talks With Bulgaria to Build Nuclear Reactor - Deal Could Be Worth Several Billion Dollars

Westinghouse Electric Co., the U.S.-based unit of Japan's Toshiba Corp. 6502.TO -1.17% , said Thursday it has entered into exclusive talks with Bulgaria for the supply of a new nuclear reactor at the country's existing Kozloduy nuclear power plant, heralding a deal likely worth several billion dollars, the Wall Street Journal reported.

Bulgarian Prime Minister Plamen Oresharski said the agreement gives the two sides nine months to hash out the financial and technical details of the potential plan. No prices have been discussed. The prime minister said the country's goal is to launch construction by the end of 2016. A binding contract is expected sometime next year.

The prime minister has said that the country should diversify sourcing in its nuclear sector and Thursday's move marks the European Union member state's reorientation from Russia, its traditional energy-sector supplier, toward the West in the critical market segment.

Westinghouse is offering Bulgaria the possibility of an accelerated construction time frame of its AP1000 1,000 megawatt installed-capacity reactor, said Westinghouse President and Chief Executive Officer Danny Roderick, after meeting with Mr. Oresharski in Sofia.

Mr. Oresharski also said that power produced in the new unit—if built—would be sold "on a commercial basis."

That contrasts the contract-for-difference model agreed on planned new reactors in the United Kingdom. Such a setup provides a guaranteed minimum sale price for power that will be produced in new reactors at the Hinkley Point nuclear power plant, which France's EDF will build.

The Pennsylvania-based Westinghouse is nearing completion of four AP1000 units in China and it has recently launched construction on four units in the U.S.

Westinghouse is also in the final round of a $10 billion tender for two new nuclear reactors at the Temelin nuclear power plant in the Czech Republic. A decision in that competition isn't likely until 2015.

Bulgaria's traditional energy-sector supplier is Russia and the two sides have recently agreed to a deal allowing Russia's planned South Stream natural gas pipeline to cross Bulgarian territory.

All six of Bulgaria's nuclear reactors at the Kozloduy plant were of Russian design, though four units have already been decommissioned.

The remaining two units, which produce one-third of the country's total electricity generation, have undergone major renovations to meet EU safety norms. Licensing on those units expires in 2017 and 2019.

Bulgaria had previously been championing the construction of a new nuclear power plant in the Belene area using reactors from Russian state-owned Rosatom.

That plan, which had been in the works for several years, carried a potential price tag of over €6 billion ($8.27 billion), which the country's erstwhile right-leaning government in 2012 said was too high. That government canceled the Belene plan in March of last year.

Russia has taken Bulgaria to international arbitration for the cancellation. A verdict hasn't been reached but the EU's poorest member state may have to pay at least €500 million in compensation to Rosatom for work already carried out.

The European Utility Requirements organization has certified that Westinghouse's AP1000 design complies with its requirements and so the AP1000 can be deployed in Europe, Westinghouse said.

The reactor is in the so-called third-generation class and uses simple passive safety mechanisms that can prevent a meltdown without requiring use of electric pumps.